13.01.2015
Driving Profitability in Logistics
Driving Profitability in Logistics We expect all our businesses tohave a positive impact on our top and bottom lines.
Profitability is very important tous or we wouldn't be in this business. - Jeff Bezos, Founder & CEO,Amazon.com As very rightly put,Profitability is the primary goal of all business ventures. Withoutprofitability the business will not survive in the long run and so drivingprofitability is very important.Theoretically, increasingprofitability is very simple – All one must do is Increase the Revenue andReduce the Expenditures – thus, achieving the perfect end result. Practicallythough, it is one of the toughest challenge to increase revenue and cut downexpenses. For logistics companiesprofitability has always been a difficult challenge. Despite increasingrevenues, only a small number of logistics services providers can achievegrowth in profitability. It means that logistics companies, in order to growtheir business profitability, must look beyond traditional ways and pursuefundamental change. Effective usage of logistics management software at eachcritical juncture of business successfully drives the profitabilitynorth-wards. Let us see how –
1.Power of Information Days are the gone of makingdecisions based on “I think...” and “good-feelings”. Making informed decisionsbased on facts is today’s best practice. By putting the available informationto good use, logistics companies can achieve great results. Utilizing the datagenerated with logistics and freight forwarding software to create reports anddashboards helps in informed decision making. Improving the time and quality ofdecision making results in simplifying operations and avoiding barriers. Asimple activity such as choosing a shipper can have its effect onprofitability. Logistics companies can make use of automatic alerts ¬ifications to improve the speed of response and avoid negative businessimpact. Reports, KPIs,Dashboards- all help instrategic, tactical as well as operational decision making. Optimizing theoperations to work in tandem with each other increases the efficiency which haspositive effects on the profitability of the business.*
2.Business Optimization to Cut Costs Freight forwarding andlogistics companies can use advance software that can integrate their entirebusiness functions and help in creating standardized processes. Processstandardization and EDI helps in improving workflows which increasesproductivity which in turn generates greater revenue and increase profitmargins. Closely integrated operations also reduce the errors in documentationand efforts in repeated data entry which allows logistics companies to focus onmore fruitful business activities such as customer service.
3. Stop Revenue Leakage Identifying the avenues to stoprevenue leakage is the most important way of improving profitability. ERPSoftware empowers logistics companies with powerful accounting and billingapplications to effectively integrate financial accounting with operations. Theintegration of operations with accounts is exceedingly important to improvecash-flows, reduce costs and control revenue leakages. For e.g. Sales team canset the alert for raising an invoice to a customer for a particular job. As perthe alert, billing team can raise the invoice and set the alerts for follow-upsbased on the credit period of the customer. This will help in minimizing theperiod of receiving the payment eliminating the delays in sending the invoiceor the chances of extending the credit period due to lack of communication.
4.Improve Customer Loyalty It is always simple, easier andmore logical to get repeat business from existing and satisfied customers ascompared to finding new customers. Existing customers also prove to be moreprofitable as businesses save on cost, time and efforts of finding newcustomers. Thus, improving customer loyalty is of utmost importance to drivehigher profitability. Logistics software helps in improving customer loyalty byproviding multiple opportunities to improve customer satisfaction. - Customer Service : Address your customers quickly and moreefficiently to improve customer satisfaction - Visibility : Provide automated and real-time shipment or cargotracking - Communication : Use alerts and notifications to provide quick,accurate and timely updates to customers
5.Effective use of CRM CRM software for logisticscompanies can be used for improving the efficiency of sales and marketing bydriving the business acquisition and customer satisfaction strategies.Logistics software can help in planning strategies based on KYC informationavailable in CRM which helps in tremendously increasing the effectiveness ofmarketing efforts. Profitability is an elusivetarget and requires focused efforts embedded into the strategy of the logisticscompany. Productive use of logistics ERP helps in fine-tuning the operationalprocedures to eliminate factors that pull down the profitability. Software forlogistics companies also supports the efforts that push the profits higher.
